Deputy Ministers of Finance at the Ukraine Recovery Conference discussed projects for reconstruction and support for small and medium-sized businesses

Deputy Minister of Finance of Ukraine Olga Zykova, and Deputy Minister for European Integration Yuriy Draganchuk took part in the Ukraine Recovery Conference, held on July 10–11 in Rome, Italy. Olga Zykova joined the panel “Effective Mechanisms of Cooperation for Financing and Implementing Ukraine’s Recovery and Development Projects”, while Yuriy Draganchuk spoke on the panel “Increasing Investment Appeal of SMEs: Internationalization, Access to Capital and Supply Chains for Growth and Social Impact”.

Olga Zykova highlighted the critical role of international financial institutions (IFIs) in supporting and rebuilding Ukraine’s economy since the start of russia’s full-scale invasion. 

She stressed that since February 2022, all domestic budget resources have been directed to defense, while international partners have played a vital role in financing civilian expenditures – including social protection, pensions, salaries for teachers, healthcare workers, emergency services, and recovery projects. This support enabled Ukraine to persevere.

Since the onset of the war, Ukraine has significantly expanded bilateral cooperation and deepened engagement with IFIs and development partners. Over the past three years, Ukraine has secured over USD 137 billion in budget support – a clear sign of trust from foreign governments and institutions.

“Trust remains the foundation of our cooperation – it’s something Ukraine has built over the years, and it enabled us to deepen partnerships even during wartime. For the first time in history, the IMF signed an Extended Fund Facility (EFF) worth USD 15.5 billion with a country under martial law. This demonstrates not only a change in Fund policy but also an evolution in approach. We were able to launch a program that anchors Ukraine’s macro-financial stability,” Zykova emphasized.

Thanks to cooperation with the World Bank, Ukraine was able to launch the unprecedented PEACE program – a flexible and direct budget support mechanism that mobilized over USD 51 billion in aid from partners and delivered rapid, targeted, and predictable funding for social and humanitarian obligations.

“Today, cooperation with international financial institutions has fundamentally changed to reflect wartime needs. This could become a textbook example of how flexible bureaucracy should work. First, IFIs have shifted their focus from long-term projects to emergency budget support and the restoration of critical infrastructure – prioritizing speed and direct impact on the public sector. Second, Ukraine is moving from merely covering urgent needs to financing reforms in governance and anti-corruption – which are key for EU integration,” explained Olga Zykova.

The Deputy Minister of Finance emphasized the key changes in the approaches of international financial institutions (IFIs) to cooperation with Ukraine during the war.

• Scale and speed: Financial support has increased dramatically. The World Bank alone has mobilized over USD 81 billion in support since 2022, of which USD 56.6 billion has already been disbursed. Approval and disbursement procedures were shortened to several months.

• Direct budget support: The majority of funds have been allocated directly to the state budget.

• Flexibility. IFIs provide resources directly to the Government of Ukraine, which can allocate them to the most pressing needs.

• Coordination: For example, the World Bank strengthened cooperation with the EU, UN, and the Government of Ukraine to ensure aid is aligned with national priorities.

• Private sector mobilization: Given limited public resources, focus has shifted toward unlocking private investment.

• Reform-based financing: Ukraine is moving away from funding basic needs and focusing more on financing reforms in governance and anti-corruption – both crucial for EU integration.

• Focus on critical infrastructure: Energy, healthcare, and housing remain top priorities.

Today, 37 active investment recovery projects totaling nearly USD 6.8 billion are being implemented in cooperation with the World Bank, EIB, EBRD, KfW, and the Council of Europe Development Bank. This includes USD 5.8 billion in loans and more than USD 0.9 billion in grants, with 52% of funds already disbursed toward rebuilding schools, hospitals, roads, and energy infrastructure.

During the panel “Increasing Investment Appeal of SMEs: Internationalization, Access to Capital and Supply Chains for Growth and Social Impact”, Yuriy Draganchuk underscored the vital importance of supporting micro, small, and medium-sized enterprises (MSMEs) to safeguard Ukraine’s economy during the war.

He noted that the state-run “Affordable Loans 5-7-9%” program became the backbone of MSME support in 2022–2023, covering 90% of all SME lending during that period. International partners actively support the program: the World Bank and KfW cover 80% of its budget expenses.

Today, the “5-7-9%” program is transitioning to more targeted support. Instead of financing working capital, it now focuses on investment projects and supporting the most vulnerable businesses – particularly those in de-occupied or war-affected regions. Priority is given to processing industries and energy efficiency and green energy investments.

Recently, the Business Development Fund (BDF) – the program’s administrator – and KfW launched a new EUR 40.5 million initiative. It will provide long-term loans to MSMEs and create a BDF Guarantee Facility to encourage banks to lend in high-risk and underserved regions.